eNews Update: State's Costly Surety Change Legislation Quashed

As noted in the latest edition of NACM’s eNews, lawmakers in Washington state were pushing hard for legislation that would double mandated surety bonds amounts and alter the timing for which preliminary notices on commercial projects could be served. However, thanks to a concerted effort by stakeholders, including members of NACM Business Credit Services (Seattle), the effort has been stymied … at least for now.

Senate Bill 6482 had been gaining what appeared to be enough support to potentially pass through the Washington legislature before the primary sponsor decided late this week to stop pushing the bill. The statutory changes sought to require surety bonds of $24,000 for general contractors (GCs) and $12,000 for subs, up from the present $12,000 and $6,000, respectively. For material suppliers on commercial projects, the preliminary notice can be served any time, but would only trap funds up to 60 days prior to the notice being served via certified mail. For material suppliers on single-family residential new construction projects, preliminary notice would only trap funds back 10 days of the notice being served. State senators behind the proposal also sought to ensure lien amounts were limited to “actual costs to the person furnishing labor, professional services materials or equipment.”

“SB 6482 sought to modify an effective existing law with language that would have been detrimental to business, especially construction suppliers, and consumers who it sought to protect,” said Jon Flora, president & CEO of NACM Business Credit Services. “For our members who regularly file liens, especially in construction trades, this bill had major negative consequences.” Flora added that letters to legislators played an important role in the bill’s ultimate failure.

Other groups opposing the bill were the Building Industry Association of Washington, National Electrical Contractors Association, Washington Aggregates & Concrete Association and Western Building Materials Association (WBMA). However, Flora does not believe this is the last that suppliers and subcontractors will hear about these proposed changes.

It is anticipated that some form of this bill may arise again in future legislative sessions,” Flora said. “This coalition of like-minded industry associations is poised to work together again as necessary. We will continue to monitor any activity through our government relations team and keep members informed."

- NACM staff

For more articles focused on construction, liens and bonds, visit NACM's Secured Transaction Services website here.

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